on 08-26-2013 1:17 PM
Please Brefliy Explain the Product costing in sap.....
Dear Prashanth Reddy,
Please go through below subject about Product cost. and also refer below links......!
Product Cost Controlling is concerned with all aspects of planning the cost of producing products or services, as well as tracking and analyzing the actual costs that are incurred in the production process. Product Cost Controlling consists of the following components:
Product Cost Planning is used for preliminary costing and can answer the following questions:
- What will be the cost of producing a certain product or service?
- Is external procurement less expensive than in-house production?
- What are the costs of production, if we assume an ideal situation?
This estimate could then be used as a baseline against which we can compare other "real world" production scenarios.
b. Cost Object Controlling focuses on tracking the actual direct costs of production and the period end closing process.
- Actual production costs are accumulated as raw materials are issued and labor is performed. This information allows detailed comparisons between the planned cost and the actual cost of any given production phase.
- Period end closing procedures include the application of overhead costs, calculation and posting of the value of goods still in production (work in process), calculation of variances between standard and actual costs, and settlement of variances to the CO-PA, EC-PCA and FI modules.
c. Actual Costing / Material Ledger is used to calculate actual costs for each material at the end of the period. Materials and their movements are valued with a standard price during the period. Any variances from this standard are collected in the material ledger when invoices are received or orders settled. During period end closing these variances are used to calculate an actual price for the material in the closed period. Postings can be made in FI to reflect this price.
a. Product Cost Planning refers to the creation of cost estimates for the production of goods or services. If a quantity structure (Bill of Material and routing) is available in the PP (Production Planning) module of the R/3 system, you can create a cost estimate automatically using the PP data. If no quantity structure is available in R/3, the cost items can be entered manually by means of unit costing, or can be transferred automatically from a non-SAP system using batch input.
A Bill Of Material (BOM) is a complete, formally structured list of the components that make up a product or assembly. The list contains the material number of each component, together with the quantity and unit of measure. The components are known as BOM items. A BOM can include materials that have their own BOMs.
The work center is the physical location at which an operation is carried out. When the master record for a work center is created in PP, it is linked to a cost center, and also the various activity types produced by the cost center. This link allows access to the activity type unit prices, which are used in valuing labor (or machine time) supplied by the cost centers in a production process.
The Routing lists the specific steps required to manufacture a product. These "steps" are called operations. The routing specifies the following for each operation:
Cost Object Controlling includes three principal steps:
1. Preliminary costing of the cost object,
2. Simultaneous costing, and
3. Period-end closing.
Various standard reports are provided to analyze the costs posted to cost objects. n
Actual Costing uses the Material Ledger to store material prices in up to three currencies and according to three valuation strategies (group, legal and profit center).
Actual Costing aims to provide the actual costs for each material at period close. Each material movement is recorded in the Material Ledger together with the preliminary valuation and any variance (from invoice or order settlement). Material settlement is used to integrate this variance into the material price at period close.
Both single -level and multi-level material settlement are available. Multi-level settlement is used to reconstruct the quantity structure based on the material movements for the period, and assign variances for the raw materials to the finished and semi-finished products as follow-up costs.
The actual price for each material can be updated to the material master for the closed period.
Profitability management
o Profitability analysis (COPA)
o Profit center accounting
Profitability Reporting:
- Profitability Analysis (CO-PA) lets you analyze the profitability of segments of your external market. These segments can be defined according to products, customers, geographic areas, and numerous other characteristics, as well as your internal organizational units such as company codes or business areas. The aim is to provide your executive management, sales, marketing, planning, and other groups in your organization with decision-support from a market-oriented viewpoint.
- Profitability Analysis (CO-PA) enables you to analyze profits and contribution margins for market segments of your company. The objective of CO-PA is to support sales, product management, and corporate-wide planning and decision-making, using an external view from a market-oriented perspective.
Responsibility Reporting:
Profit Center accounting (EC-PCA) lets you analyze internal profit and loss for profit centers. This makes it possible for you to evaluate different areas or units within your company. You can structure profit centers according to region (branch offices, plants), function (production, sales), or product (product groups, divisions). Profit Center Accounting is a component of the "Enterprise Controlling" module.
LInks:
http://help.sap.com/printdocu/core/print46c/en/data/pdf/COPCIS/COPCIS.pdf
http://help.sap.com/printdocu/core/Print46c/en/data/pdf/COPCPCP/COPCPCP.pdf
http://help.sap.com/printdocu/core/print46c/en/data/pdf/ides/idescopc/idescopc.pdf
Best Regards,
Krish.
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Hi
Product Costing, part of the Controlling module, is used to value the internal cost of materials and production for profitability .
For simple understanding of Product Costing you can go through below link.
http://www.slideshare.net/rshanbhag/product-costing-in-sap-a-primer
Regards
Praveen
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Dear Prashanth,
Product costing means costing done for product at process order which include BOM and routing
it is an integration with FI-MM-SD-PP start product costing following thing are required
1) MM : Material Master
Create one Finished Material
Create one Semi finish material
Create two Raw Materials
note that FMG & SFMG should be Standard Price for costing where as
Raw material should be variable Price all above material should be costing 1 & 2
should be activated all material
2) CO:
1) Create one Secondary Cost Element for example :"Machine"
with cost element category as "43 - internal activity allocation "
2) Create Activity type for Machine
1) setup
2) Labour etc.
3) Create one Production Cost Center and two more cost center for allocation
3) PP:
1) Create Work Center attached cost center along with Activity type as mentioned above
2) Create BOM for Finished material which include Sfm & two Raw material
3) Create Routing for Finished material and mentioned work center in operation
4) Co:
1) Run Cost Estimate through CK11N / CK40N
2) Marked and release the cost estimate
5) PP: Create one Process Order with Qty and activity unit
Confirm the Process order with goods movement 261 with accounting entry
(consumption a/c Dr to Stock Cr )
6) MM : kindly Create Goods receipt through movement type (101) through Migo
Hope this may help you to under stand the process
Thanks
Trinath
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Hi Prashanth,
In SAP Controlling module, there are 2 important and vast sub modules are there:
1) Product Costing (COPC)
2) Profitability Analysis (COPA)
Product Costing :-
where you can plan costs for materials without reference to orders and set prices for materials and other cost accounting objects.
You can use Product Cost Planning to analyze the costs of your company’s products such as:
You can analyze costs to help provide answers to questions such as:
This is the overview about Product costing, let me know if you need any specific information on the same.
Regards,
Vinod
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Hi Prasanth,
Its very basic query and you can find lots of information by googling.
Go through the below thread, where I have given some basic points on Product costing.
http://scn.sap.com/message/14097664
Also, refer the below blog for better understanding:
In the above link, you can find the other continuous links for other areas of product costing.
BR, Srinivas Salpala
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